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Lecture 2
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Geo-Centric Business What is geocentricism?
Geo-centricism is an outdated cosmology that mistookthe earth to be the centre of the universe.
The phrase ‘Geo-centric’ is used in business literatureto represent global characteristic of business\
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Geo-p0litics: Politics (exercise of power) in global scalefor the control over strategic resources, labour andexclusive property rights.
The management neologism ‘geo-centric’ refers tomanagement of geo-politics by corporate firms of global scale.
The term geo-politics refers to: Global world order changes
It is about future direction of international affairs andthe coming shape of the world political map.
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19th century geo-politics French cartoon
(Jewish banker Rothschild holding theworld)
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Geo politics cartoon of early 20th
century- British vs German
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Geo-centric business, geo-politics seen from businessperspective, is embedded in economic, political, and
racial relations of power.
Geo-centric business though expansionist in nature donot share the shame of territorial expansion of nation-states.
Geo-politics was never independent of global businesscorporate firms
Of late the corporate firms have come out of the shell
of national identities. Currently the global corporate endeavors are presented
as the triumph of free-trade.
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‘Geo-centric’ staffing in HRM refers to recruitingpeople in key positions from all over the worldirrespective of their national identities.
‘Geo-centric’ policy of management refers to having abusiness expansion policy across all cultures (eg.Cadburys ad. On the ‘holiness’ of ‘sweet’. Vicks vaporub presenting itself as ‘ayurvedic propriety
medicine’ Geocentric finance is investing in different parts of the
world and earn out of global disparity of currency,interest rates, asset values and economic growth.
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Geo-centric perspective of law refers to either moldingthe entire world into a single law wherever it isappropriate (eg. Intellectual property laws).
Or, taking advantage of or promoting unique locallaws (eg. Nuclear liability bill, Laws regarding waterextraction, Pollution laws, insurance laws, labour laws)
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Geo-centric business is distinguished from Ethno-centric, Euro-centric, Anglo-centric, US-centricbusiness practices
Ethno (euro, anglo etc)-centric policies will be having
uniform norms flowing from one cultural (ethnic)perspective of management on the others. Theappropriate terminology for the managementneologism ethno-centric is “mono-centric”
Note: in other fields of knowledge (anthropology,sociology, politics and cultural studies) ethno centricrepresents viewing things from ethnic perspective i.e.,local perspective.
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Polycentric management is contrasted with mono(ethno) centric.
Polycentric management practice allows localadaptation of mono-centric management strategies
and practices. By geo-centric, (unlike the phrase is used in other
fields,) it is meant by some management ‘experts,’ the‘tailor-made’ decentralized management practice
appropriate for the geological locations of itsoperation.
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Geo-centric, poly-centric or ethno-centricmanagement practices are discussed in the context of acquisitions and mergers which requires culturaladaptations.
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‘Virtues’ of ‘Geo-centric’
management Adaptiveness
technical competence
Self confidence Commitment to business expansion of the firm
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Means to avoid ‘Expatriate failure’ Acquiring information
Trained to be culturally acceptable
Being trained in cultural etiquettes and manners Preparing ‘spouse’ and children to be culturally
aceptable
develop a salary structure that equalizes purchasing
power across countries
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Possible options Stock options
Highest paid and lowest paid should be in an
appropriate ratio (For eg. lowest paid should not have asalary less than 1/10th to 1/20th times of the highestpaid).
Total compensation, forms of compensation, as well as
the gap between top executives and hourly workers vary substantially across countries. Appropriatedecision should be taken so that the local executivesdo not feel exploited.
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CEO compensation pattern
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Country specific labour relation policies
Country specific labour rights organizations
Accommodating ILO perspectives in internationallabour management
Making use of cheap labour resources
Making use of market potentials
Making use of pricing conventions
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Appropriate intervention in local labour laws
Making use of country specific labour uniondynamics
Managing appropriate gender representations (it is
believed greater share of women labourers reducesthe strength of labour rights organizations)
Increasing contract labourers weakens labour
rights organizations Outsourcing weakens labour rights organizations
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Use of ‘temporary labour’ weakens labour rightsorganizations
Having a pro-labour policy weakens labour rightsorganizations.
Linking labour decipline to career development weakens labour rights organizations.
Presentation of the organization as key to localdevelopment
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The ideal business environment expected by
international Business Firms
Educated & trained workforce
Increased global/local demand for the product/services
Absence of alternative labour oppurtunities (increased
dependency on private firms) Absense of Government regulation
Increased presence of government in protecting therights of the firms
Restricted consumer/ labour rights
No preferential treatment to local firms
Friendly Media
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internationalization of Business Flight of the capital (Economic argument)
De-stabilization of local economy (nationalistargument)
Local firms contesting international competition
Protectionism (local fordism) Preferential treatment to small scale sectors (local
economy argument)
Resistance from environmentalist groups (coca cola)
Past lacuna of international firms in compensatingloss (Bhopal)
Alleged/ actual large scale corruption (Enron)
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Arguments from labour economy (both for andagainst)
Ideological opposition Vs Ideological support
Political opportunism
Anger against special privileges given to foreigninvestors
In general there is more of an economic and politicalclimate for international business than against it.
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Major Global CompaniesSoftware
Microsoft (USA)
Adobe (USA) Coral (USA)
Redhat (USA)
Infosys (India)
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Computer hardware
Hawlett-packard (US)
Dell (US) IBM (US)
Intel (USA)
AMD (USA)
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Seed Companies
Monsanto (USA)
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Retail
Wallmart (USA)
Carrefour (France) Tesco (UK)
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Oil & Gas
Exxon Mobil (US)
Royal Dutch shell(Netherland, UK)
BP (UK)
Saudi Aramco (Saudi)
Chervon (US) Sinopec (China)
ConocoPhillips (US)
Total S.A (France)
ENL (Italy)
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Automobile
Tayota (Japan) Honda (Japan)
Hundai (S.Korea)
Ford (USA)
Volkswagen (Germany)
General Motors (US)
Daimler AG (Germany)
BMW (Germany) TATA group (India)
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Electronics
Samsung (S.Korea)
General Electric (USA)
Hitachi (Japan)
LG (S.Korea)
Sony (Japan)
Canon
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Finance
ING group (Amsterdam, North Holland, Netherlands)
Allianz (Germany) AXA (France)
Fortis (Belgium)
Bank of America (US)
American International Group (AIG)
Avira (UK)
Deutsche Bank (Germany)
Goldman Sachs (US) Morgan Stanley (US)
Citigroup (US)
HSBC (UK)
Prudential (UK)
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TeleCommunication
AT&T Inc.
Nippon telegrapg and telephone (Japan) Nokia (Finland)
Vodafone (UK)
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Mining/Steel/Iron
Arcelor Mittal (Luxembourg)
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Food
Nestle (Switzerland)
Health Johnson & Johnson
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Points To Ponder There exists no Global democracy – but there is global
business
Even if there is a global democracy- would it beeffective?
Declining power of the local persons- while they arethe labourers, source of intellectual property, and
consumers! What should be the nature of the science of
‘international business’?